Reality spoils dream of state's saving plan

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A program to save millions of dollars in the NSW public service
by centralising payroll, information technology and human resources
has fallen short of its target and is likely to increase pressures
on the state's budget.

The Auditor-General's Office revealed yesterday that expected
savings of about $300 million in 1996, when the program was
announced, were proving difficult to find. The savings were to be
redirected into front-line services, such as employing more
teachers and nurses, and have already been factored into savings to
pay for public sector wage rises.

But so far, less than 5 per cent of that amount - $13.6 million
- has been saved and large departments and agencies were slow to
implement the program, the Assistant Auditor-General, Stephen
Horne, said. "Turning the dream into reality has not been as
expected," he said.

The state's finances have been strained by a slower property
market, which has reduced the income from stamp duty.

While smaller agencies made progress toward consolidation, the
Auditor-General's Office found larger bodies - such as health,
education and police - were slow to implement the program.

The bigger departments were supposed to yield 80 per cent of the
identified savings.

Another problem was that many agencies used different computer
systems and bringing them together was more difficult and costlier
than first thought, Mr Horne said.

The cost of implementing the program, $79 million, has
outstripped the savings.

The Central Corporate Services Unit, which was set up to take
over some of the functions of other departments, also did not
perform well in its early years, he said.

The Department of Commerce, which administered the program,
disputed the Auditor-General's assessment.

"The report is based on results to June 2003. Since then, much
has been done to increase savings, including consolidating
corporate services in the new departments of Commerce;
Infrastructure, Planning and Natural Resources; Environment and
Conservation; Primary Industries; and Tourism, Sport and
Recreation," said the department's director-general, Michael
Coutts-Trotter.

The NSW Treasurer, Michael Egan, was also upbeat about the
state's overall budget performance, citing a comparison by the
Australian Bureau of Statistics of state and territory finances. It
found that NSW's $378 million deficit for 2004-05, known as the net
lending deficit, was just 1 per cent of total expenses and on a par
with the deficits of Queensland and Western Australia.

It also found that NSW would have the strongest operating
surplus (before loan repayments) in the country and the
second-strongest cash surplus, the Treasurer said.

Mr Egan also welcomed the decision by the international credit
ratings agency Standard & Poor's to affirm the AAA credit
rating for NSW.

The agency found that the general government balance sheet was
"extremely strong", and that "net debt had fallen to extremely low
levels".

Mr Egan said Standard & Poor's also noted that the Carr
Government continued to invest heavily in infrastructure.

"One of the world's top ratings agencies has noted our
commitment to improving the state's infrastructure," he said.